How to calculate the salary of the company owner? This is a very common question and many professionals don't know how to calculate it correctly. And if this issue is not addressed in a planned and coherent manner, the chances of your company having major problems are enormous.
This is precisely why it is considered one of the major causes of company bankruptcy. Mainly small and medium-sized ones. Therefore, if you want to make your business grow constantly in an organized, assertive and healthy way, now understand how to calculate the company owner's salary in 06 essential steps that successful entrepreneurs use.
All in a practical and profitable way. You want to receive tips and information to set up your own business. So subscribe to this channel and stay up to date with everything you need to know to open your own company.
If you are thinking about starting your own business or already have one, defining your salary is essential for the success of your company and for your personal livelihood as well. And this step is very important to work well because many entrepreneurs want to make a lot of money right away. But to be able to earn a good income from your business, first, your company needs to always be healthy and profitable.
Therefore, we can say that determining the salary of a company owner is a complex process that involves several financial, legal and strategic aspects. Unlike an employee, the owner or partner of a business may have varied financial compensation that does not necessarily follow the same guidelines as a fixed salary. Therefore, to make this matter clear, we first need to address a few points.
How: 1. WHAT IS THE DIFFERENCE BETWEEN SALARY AND PROFIT FOR PARTNERS OF A COMPANY? 2.
DEFINING THE SALARY OF A BUSINESS OWNER 3. ALL THE IMPORTANCE OF DEFINING THE SALARY OF THE COMPANY OWNER 4. 06 PRACTICAL STEPS ON HOW TO CALCULATE THE SALARY OF THE COMPANY OWNER So, let's go !
1. WHAT IS THE DIFFERENCE BETWEEN SALARY AND PROFIT FOR PARTNERS OF A COMPANY? Before determining the value of the owner's salary, it is essential to understand that two different types of partners can coexist within a company: the managing partner (or managing partner) and the investing partner (investing partner) .
In short, the managing partner plays an active role in the daily management of the business. Thus, it is involved in administrative, financial functions and other activities that involve day-to-day operations as a whole. In other words, it is the person who works directly within the company, taking care of its operations.
In this type of partner, it is appropriate for this person to receive a previously agreed fixed salary. In addition, you have the right to share in the profits generated by the company. This profit sharing is additional compensation for your active involvement and direct work in managing the business.
The investing partner (or investing partner) is a person who does not play a direct role in the company. However, it makes financial investments in it. This type of partner will have the exclusive right to share in the profits generated by the company.
All as a form of reward for your investment. Therefore, the fixed salary is reserved for partners who actually play an active role and work in the company. In other words, they contribute directly to your operations.
On the other hand, the distribution of profit must be carried out among all partners, considering the proportion of each one's participation in the company. Whether administrative or investor. Therefore, it is important to point out that the distribution of profits should only occur when the company presents positive results.
In other words, after paying all monthly expenses and defining the financial reserves necessary for the health and stability of the business. But we will delve deeper into this throughout this video, okay? 2.
DEFINITION OF THE SALARY OF A BUSINESS OWNER Basically, the salary of the owner of a company is called pro-labore. In other words, it is how much the company's owners receive according to the work or function performed. The law does not determine a specific value, and it is up to the partners to determine the value of the pro-labore.
The only rule regarding values is that the pro-labore cannot be lower than the current minimum wage. And an important point is that pro-labore is different from salary. According to labor law, pro-labore differs from salary precisely because, on top of this remuneration, benefits such as FGTS, 13th salary, vacation, among others, are not mandatory.
However, these benefits can also be offered to partners, through an agreement between the company and the partners themselves. And a very important point is that the pro-labore is considered the remuneration of the partners. However, partners can receive an even higher remuneration if the distribution of the company's profits is divided among the partners.
In this case, this distribution of profits comes separately, not considered pro-labore, which changes the issue of tax incidence. Nowadays, it is very common to find: • Partners with only pro-labore • Partners with pro-labore plus division of the company's profits And a very common question is whether it is possible to remove Profit Distribution and not remove Pro-labore? And the answer is no, it is not permitted by law to only distribute profits in advance.
And in case of withdrawal only from the distribution of profits, the entire amount withdrawn as profit will be considered pro-labore. And then, the INSS is calculated based on the total value of the profit distribution. 3.
THE ENTIRE IMPORTANCE OF DEFINING THE COMPANY OWNER'S SALARY As we said previously, pro-labore is mandatory here in Brazil. This way, local requirements and laws are complied with. At the same time, by establishing a fixed salary for owners, more precise control of business expenses is provided .
By doing this, it will be possible to clearly know how much the company needs to invoice monthly to cover all costs and expenses. Including the salaries of owners or managing partners. Furthermore, if the owner wants to step away from that position so he can dedicate himself to other functions, the calculation of this remuneration already demonstrates the approximate amount it would cost for the company to hire a new person for that position.
This contributes to more effective management and the creation of realistic financial goals. Furthermore, it is quite common for entrepreneurs to withdraw money from the company's cash register whenever necessary. Or, at the end of the month, make withdrawals based on what remains after paying the bills.
However, this practice is wrong and very dangerous. Doing so results in the mixing of personal and business finances. Furthermore, effective financial management requires that the profit (or a large part of it) be reinvested in the company itself, establishing solid financial planning .
This will create a very solid foundation for your business to grow every day. As well as taking advantage of possible opportunities and honoring all commitments as well. Therefore, when determining a fixed pro-labore, the company's owners or administrators are clear about the remuneration they will receive.
As a result, this allows for better organization of personal and business finances. This greatly helps with the financial stability of the business. Also, establish a pro-labor remuneration to help you understand and cover your personal expenses.
4. 06 PRACTICAL STEPS ON HOW TO CALCULATE THE COMPANY OWNER'S SALARY 1. DETERMINE THE FUNCTIONS OF EACH PARTNER The first step is to define the functions each partner performs in the company.
List very clearly what each person’s responsibilities are. Even if there are many obligations, you need to list them all to reach a specific position and move on to the next step. 2.
RESEARCH MARKET VALUES Having defined the roles and responsibilities of each partner, now it is time to research the salary for each role on the market. This way, you will be able to have a basis for how much it would cost the company if it needed to hire employees for each role that will be performed by each partner. Here, it is possible to carry out this type of consultation in companies specialized in professional recruitment or websites and newspapers that also offer job vacancies.
Based on this, make the necessary calculations to find an ideal and coherent value for each partner's pro-labore. 3. UNDERSTAND THE COMPANY’S FINANCIAL CAPACITY Many entrepreneurs end up failing to define pro-labore.
Often because they prefer to consider a high value to be able to have more profits. This is quite dangerous. Mainly because withdrawing money from the company without planning and responsibility is a critical factor in the poor financial performance of any type of business.
Therefore, be extremely coherent and realistic with the company’s situation. Don't try to earn more than is appropriate in each situation. Otherwise, it could significantly harm the company's cash flow and its respective growth.
4. SEPARATE PERSONAL FINANCE FROM THE COMPANY One thing is the company's cash flow. Another is the entrepreneur's personal portfolio.
This needs to be very clear and needs to be done. The financial health of your business cannot be mixed with your personal account. Separating them will give you greater control over financial management, both business and personal.
5. BE CONSISTENT Remember that it is possible to control partners' earnings through pro-labore together with profit divisions. Because the main function of the pro-labore is to ensure that each partner is remunerated fairly in order to balance their personal costs that were incurred specifically for the company.
And that the distribution of profits is an important element to increase the financial income for each partner. Mainly because the better the company's performance, the greater the profit to be divided. This way, your company's financial planning will be even healthier and stronger for growth.
Keep in mind that the more your company can grow, the greater the basis for each partner to earn even more from the company in a responsible, healthy and planned way, agreed? And if you want to understand how to work on business financial planning in the right and practical way, we have a video that covers this topic well. To watch, just click this button above or the link in the description.
6. SET GOALS And setting goals and objectives will help you understand when it will be possible to increase your remuneration. And don't make mistakes and rush to increase the owners' salaries.
Remember that the more the company grows, the greater the business's revenues and revenues will be. This way, it will be possible to increase your team's salary according to need and merit as well. Including your pro-labore and profit sharing.
Everything in a planned, organized and assertive way. However, remember that it is essential to always reinvest in your company. And don't remove everything every month or periodically because this is very harmful to your business.
And always do this to have an updated plan according to the company's progress over time, agreed? Did you see how calculating the company owner's salary is something that requires a lot of attention, planning and coherence? If you work on this subject well, you can be sure that you will be ahead of many professionals in the market.
And still with a very solid foundation to grow and always be successful. Can believe! However, the tips we talk about here are mandatory and very powerful.
But they are not the only ones. So, if there is anything else that we didn’t mention, write it here in the comments and share it with us! And there?
Did you like this video? So, if you can, click the “Thanks” button below and help our channel so we can continue producing and improving videos and content of this type for you. And just to recap what we said here: 1.
WHAT IS THE DIFFERENCE BETWEEN SALARY AND PROFIT FOR PARTNERS OF A COMPANY? 2. DEFINING THE SALARY OF A BUSINESS OWNER 3.
ALL THE IMPORTANCE OF DEFINING THE SALARY OF THE BUSINESS OWNER 4. 06 PRACTICAL STEPS ON HOW TO CALCULATE THE SALARY OF THE COMPANY OWNER We hope you enjoyed it ! And if you want to know more about how to set up and manage your own business, visit our YouTube channel where we have several videos on this subject, okay?
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